#FOMO = Fear Of Missing Out. Fomo is a serious killer for an SMP Trader.
When you succumb to fomo, bad things happen. The number one issue caused by fomo is massive over-trading. Over-trading is deadly, so always remember: TRADES ARE GOING TO GO BY WITHOUT YOU AND IT’S OK! THERE WILL BE MANY MANY MANY MANY MANY MORE TRADES. When you overcome fomo, you can now wait for clear market conditions with a well defined directional bias. Once direction has been established, wait for an opportunity like a good pullback, focus on getting great low-risk entry, and just let the directional bias take the trade in your direction.
By overcoming fomo, you end up taking far fewer trades because you are not jumping at every little whiffle and tick in the market. When you become more selective about your trading, you only enter the trades you feel most strongly about. Winning trades happen when a trader first gains a strong understanding of the current market conditions and then develops a strong belief about what is about to happen next.
The #fomomonster can also cause a trader to start foolishly trying to call the turn. The reason fomo starts causing you to call the turn is that you’re afraid that this one little area of resistance might be the place that the market suddenly turns around. You start thinking, “What if this is the new low? It could be a huge trade. I don’t want to miss out on that….” Calling the turn against a clear directional bias is one of the most frustrating and fruitless endeavors on earth (ask me how I know). If you want to steer clear of the monster, ONLY TRADE WHEN YOU HAVE STRONG EVIDENCE TO SUPPORT A MOVE IN FAVOR OF YOUR DIRECTIONAL BIAS.
If we focus on getting great entry, we can keep our negatives quite small. If we avoid the fomo and only enter trades when we have a strong belief about the upcoming move, we will combine smaller and less frequent losses together with larger, more frequent wins. Now that sounds like the winning recipe for trading success to me!
I love hearing back from fellow traders! Please email me at email@example.com.